What are the pain points for landlords who buy and rent out properties in the UK?
Have some spare money to invest? What should you be aware of if you want to buy a property and become a landlord? This blog post mainly discusses the difficulties that general investors will encounter when investing in property, such as "finding good tenants", estimating rental returns, property damage and the complexity of maintenance, and so on. Many people have advocated "housing to support education" in recent years, which means that parents use the money earned from buying and renting out properties to pay for their children's overseas study expenses. After research, the author found that as long as the main pain points of buying a property in the UK are understood and appropriate measures are prepared in advance, this investment tool really has its advantages.
Buying and Renting Properties in the UK: An Overview of Investment Returns
With the robust property prices in Hong Kong, "retiring as a landlord" has become an ideal choice for many Hong Kong people who want to create passive income. But is investing in Hong Kong property the best method? According to data from Centaline Property, the rental return in various districts of Hong Kong is 2-3%. Comparatively, properties in the UK can offer a higher return of up to5.9%At the very least, there is a 3% return. Comparatively, the rental return rate for HMOs (House of Multiple Occupation, i.e., subdivided flats in the UK) is even higher. According to MyHMO, an 8% return is guaranteed, which is quite substantial.
However, as investing in UK properties and UK HMOs become buzzwords, many Hong Kong people fall into traps due to partial understanding and the misleading actions of unscrupulous businessmen. MyHMO, as a property investment consultant specializing in HMOs and a partner of government-approved institutions, hopes to point out the things to be aware of when investing in UK HMOs, so that investors can more securely reap the benefits of investing in HMOs.
Main Pain Points, Traps, and Drawbacks of Buying and Renting Properties in the UK
- The Burden of Tenant Management
a. Dealing with 'Rental Bullies' and Finding Reliable Tenants
For landlords, the biggest challenge of buying a property to rent out is finding a reliable tenant who will pay the rent on time and take good care of the property. To achieve this, it's necessary to conduct a proper background check, understand their income, and maintain good communication. However, these steps can't guarantee everything will go smoothly.
b. Vacancy Periods and Tenant Turnover
Besides, a property being vacant for a long time can cause a significant financial burden. You still need to pay the mortgage or insurance, and extra costs and effort are required to advertise the property to find new tenants. Even the best tenants won't stay forever. The process of checking out old tenants, updating the property, and screening new tenants can cause financial and emotional stress.
| How Can MyHMO's Professional Consultation Help You? MyHMO is a partner of the UK government-affiliated organisations Serco and Mears. Many of MyHMO's properties are backed by the government, meaning landlords only need to pay the insurance fee monthly and don't need to find tenants themselves. The government and real estate merchants handle the tenant recruitment work. |
- Maintenance and Repairs
a. The Importance of Facilities to Property Value
Whether the facilities of a property meet government requirements can have a significant impact on its value. Take UK HMOs for example, non-compliant fire systems can hinder the application of a property for an HMO license. This is not something to be taken lightly. Incorrect or non-compliant facilities can have a significant impact on the property price and rental returns. And, generally speaking, the rental returns of HMOs can be twice as high as those of Buy-to-Let (BLT) properties.
b. The Time Required for Long-Term Maintenance
Landlords have a legal obligation to maintain housing safety and habitability. This means that timely repairs and regular maintenance are required, which can become costly and time-consuming.
| How Can MyHMO's Professional Consultation Help You? As mentioned earlier, with a government-approved real estate merchant handling the operations, they also take care of the property maintenance. Regarding initial property construction, MyHMO's experts are even better at providing professional advice to ensure that the properties landlords build meet government statutory requirements. If the goal is to build an HMO, MyHMO can handle all the renovation and construction for you to ensure nothing goes wrong. |
- Investment Returns and Profits
a. Rental Income and Cash Flow
Lastly, and most importantly, ensuring stable and sufficient rental income is a major challenge. Market trends, interest rates, and property values are just a few factors that affect rental income. The property market has its ups and downs, so how can investors ensure that their rental income is not affected by tenant relocation and fluctuations?
b. Long-Term Return Estimation
In terms of returns, apart from rental income, the most important thing is the potential for property appreciation. Various factors such as region, type of property, country, etc., all need to be considered.
| How Can MyHMO's Professional Consultation Help You? MyHMO provides you with potential properties, the features of these properties include: You can expect an 8-10% return rate annually with a 5-7 year lease term, meaning for 5-7 years, the government and property managers will handle tenant recruitment and management for you, allowing landlords to just pay rent and receive rental income on time each month. Properties come from regions with great potential for appreciation, with increases of over 10% in the past 5 years. |
Conclusion: As long as you ensure stable rental income and have a professional and reliable team to handle daily maintenance issues, buying and renting properties in the UK can bring considerable returns to investors.
In summary, when investing in UK properties, the biggest pain points for general investors are (1) the burden of tenant management, (2) the potential time landlords have to spend on maintenance and repairs, and (3) the returns and profits from property investment. MyHMO, as a property investment consultant, can help investors with these pain points. In terms of buying and renting out properties in the UK, the investment returns of HMOs are greater than traditional Buy-to-Let, though there are more matters to pay attention to.
